The Fund seeks to achieve: • reduced exposure to S&P/ASX200 Accumulation Index drawdowns; • a total return that exceeds the Reserve Bank of Australia Cash Rate; and • an income return at a premium to the S&P/ASX200 Accumulation Index dividend yield. The investment strategy of the Fund is to provide investors with access to companies listed on the Australian Securities Exchange that Lazard believes offer sustainably high dividends and capital appreciation potential.
As at 30 September 2023, the Fund is invested in 32 companies which meet the criteria of a dividend yield above the cash rate, capital appreciation potential and sustainability of dividend. Given between 1% and 3% of Fund assets will be invested in each qualifying company at month end, listed shares accounted for 80.7% of assets and 19.3% of Fund assets were invested in cash deposits.
As at 30 September 2023, the Fund’s aggregate forward yield continued to look attractive at 5.1%, or 5.5% when “grossed – up” for franking credits and tax deferral benefits*. This can be compared to the RBA annual cash rate at month end of 4.10%. The RBA measurements of term deposit rates in the Australian market, the “Average Rate (all terms)” ended the month at 3.6%.
September 2023 saw 15 dividend payments and eight ex-dates.
Charter Hall Group (CHC) is a property funds management company with a solid track record of growing FUM across a range of diversified asset classes. As of 30 June 2023, CHC manages $71.9bn of property FUM, with a group FUM of $87.4bn, inclusive of $15.6bn from its PIM Partnership, generating earnings via co -investment income, property development and funds management fees. Despite recent weakness in the commercial property market, CHC managed to grow its property FUM by 10% in FY23. CHC has minimal net debt at the parent company level and in our view has substantial investment capacity for growth opportunities. The stock is currently trading on a 4.7% dividend yield, and FY24 guidance is for 6% yoy growth in distributions.
Looking ahead, we expect two dividend receipts in October 2023.
What is Lazard Defensive Australian Equity Lazard Defensive Australian Equity is an Managed Funds investment product that is benchmarked against ASX Index 200 Index and sits inside the Domestic Equity - Absolute Return Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Lazard Defensive Australian Equity has Assets Under Management of 11.61 M with a management fee of 0.81%, a performance fee of 0.00% and a buy/sell spread fee of 0.4%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Lazard Defensive Australian Equity has returned 4.62% in the last month. The previous three years have returned 9.99% annualised and 10.34% each year since inception, which is when the Lazard Defensive Australian Equity first started.
How is risk measured in this investment product?
There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Lazard Defensive Australian Equity first started, the Sharpe ratio is NA with an annualised volatility of 10.34%. The maximum drawdown of the investment product in the last 12 months is -5.15% and -16.96% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product?
Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Lazard Defensive Australian Equity has a 12-month excess return when compared to the Domestic Equity - Absolute Return Index of -2.6% and 0.47% since inception.
Does the investment product produce Alpha over its Peers?
Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Lazard Defensive Australian Equity has produced Alpha over the Domestic Equity - Absolute Return Index of NA% in the last 12 months and NA% since inception.
What are similar investment products?
For a full list of investment products in the Domestic Equity - Absolute Return Index category, you can click here for the Peer Investment Report.
What level of diversification will Lazard Defensive Australian Equity provide?
Lazard Defensive Australian Equity has a correlation coefficient of 0.82 and a beta of 1.35 when compared to the Domestic Equity - Absolute Return Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers?
For a full quantitative report on Lazard Defensive Australian Equity and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Lazard Defensive Australian Equity with the ASX Index 200 Index?
For a full quantitative report on Lazard Defensive Australian Equity compared to the ASX Index 200 Index, you can click here.
Can I sort and compare the Lazard Defensive Australian Equity to do my own analysis?
To sort and compare the Lazard Defensive Australian Equity financial metrics, please refer to the table above.
Has the Lazard Defensive Australian Equity been independently verified by SMSF Mate?
This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
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Comments from SMSF Mates
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Performance Commentary - August 31, 2023 As at 31 August 2023, the Fund is invested in 31 companies which meet the criteria of a dividend yield above the cash rate, capital appreciation potential and sustainability of dividend. Given between 1% and 3% of Fund assets will be invested in each qualifying company at month end, listed shares accounted for 78.9% of assets and 21.1% of Fund assets were invested in cash deposits.
As at 31 August 2023, the Fund’s aggregate forward yield continued to look attractive at 4.8%, or 5.8% when “grossed -up” for franking credits and tax deferral benefits*. This can be compared to the RBA annual cash rate at month end of 4.10%. The two RBA measurements of term deposit rates in the Australian market, the “Average Rate (all terms)” and the “Special Rate (all terms)”, ended the month at 2.90% and 3.20%, respectively.
August 2023 saw four dividend payments and eleven ex-dates.
Bapcor (BAP) is a leading auto aftermarket supplier in Australia and New Zealand. This market is generally less cyclical from a demand perspective and has a history of rational competitors’ behavior, both of which support cash flows and dividends. While BAP’s near-term dividend is modest with a net yield of just under 4%, our assessment of sustainable yield is much higher as we expect dividends to grow at a high-single digit rate over the next few years. We believe that this growth could be supplemented if the management’s cost and efficiency program, “Better Than Before’ is successful. Minimal success of this program is currently factored into BAP’s stock return and dividend expectations and in our view makes the company a candidate for an improved outlook.
Looking ahead, September 2023 will be busy with ten dividend receipts expected.
Performance Commentary - July 31, 2023 As at 31 July 2023, the Fund is invested in 30 companies which meet the criteria of a dividend yield above the cash rate, capital appreciation potential and sustainability of dividend. Given between 1% and 3% of Fund assets will be invested in each qualifying company at month end, listed shares accounted for 74.7% of assets and 25.3% of Fund assets were invested in cash deposits.
As at 31 July 2023, the Fund’s aggregate forward yield continued to look attractive at 4.8%, or 6.0% when “grossed -up” for franking credits and tax deferral benefits*. This can be compared to the RBA annual cash rate at month end of 4.10%. The two RBA measurements of term deposit rates in the Australian market, the “Average Rate (all terms)” and the “Special Rate (all terms)”, ended the month at 2.90% and 3.20%, respectively.
July 2023 saw two dividend payments and two ex-dates.
Collin’s Foods (CKF) reported their FY23 annual result in June 23 which modestly beat expectations due to robust top line growth. It appears the margin impact from cost inflation is peaking with lower costs to boost margins later in FY24 and into FY25. The company is executing well on scaling up the Netherlands business which may lead to higher margins over time in that business. The market responded positively to the solid top line growth in a challenging consumer environment and is beginning to appreciate the long-term growth potential in the European business. While the near-term dividend yield on offer is modest at approximately three percent, our assessment of the long -term sustainable yield is higher with a solid double-digit CAGR in dividends expected over the near term.
Looking ahead, Aug 2023 will see three dividend receipts.
Performance Commentary - June 30, 2023 As at 30 June 2023, the Fund is invested in 28 companies which meet the criteria of a dividend yield above the cash rate, capital appreciation potential and sustainability of dividend. Given between 1% and 3% of Fund assets will be invested in each qualifying company at month end, listed shares accounted for 72.3% of assets and 27.7% of Fund assets were invested in cash deposits.
As at 30 June 2023, the Fund’s aggregate forward yield continued to look attractive at 4.6%, or 5.8% when “grossed -up” for franking credits and tax deferral benefits*. This can be compared to the RBA annual cash rate at month end of 4.10%. The two RBA measurements of term deposit rates in the Australian market, the “Average Rate (all terms)” and the “Special Rate (all terms)”, ended the month at 2.65% and 3.05%, respectively.
June 2023 saw two dividend payments and one ex-date.
Metcash (MTS) will go ex-dividend in July 2023 paying 11 cents per share after reporting FY23 results in late June, taking the full year dividend yield to 6% (8.5% including franking). Today, the business is roughly 40% Hardware, 40% Food Wholesale and 20% Liquor Distribution by profits. Metcash is coming off two years of strong profit growth and in our view is likely to see earnings and dividends stabilize going forward. The drivers of this moderation are the unwinding of the ‘shop local’ trend that was seen during COVID-19 and a moderation of the renovation boom over the same period. That said, we view the current dividend as sustainable and on a 12x P/E we believe the slower near-term earnings outlook is arguably priced into the shares. Longer term we believe there will be further growth primarily in the Hardware division which may grow earnings and dividends. We continue to hold MTS in the Fund.
Looking ahead, July 2023 will be a quiet month on the dividend front with two dividend receipts expected.
Performance Commentary - May 31, 2023 As at 31 May 2023, the Fund is invested in 29 companies which meet the criteria of a dividend yield above the cash rate, capital appreciation potential and sustainability of dividend. Given between 1% and 3% of Fund assets will be invested in each qualifying company at month end, listed shares accounted for 73.6% of assets and 26.4% of Fund assets were invested in cash deposits.
As at 31 May 2023, the Fund’s aggregate forward yield continued to look attractive at 4.8%, or 6.0% when “grossed-up” for franking credits and tax deferral benefits*. This can be compared to the RBA annual cash rate at month end of 3.85%. The two RBA measurements of term deposit rates in the Australian market, the “Average Rate (all terms)” and the “Special Rate (all terms)”, ended the month at 2.45% and 2.90%, respectively.
May 2023 saw one dividend payment and four ex-dates.
Elders (ELD) is an Adelaide headquartered company which is engaged in providing financial, real estate services to rural, agricultural, and automotive businesses. ELD’s share price fell substantially in May 2023 as the company reported the profitability was retracing from cyclical high levels. Post the result, and at the current lower share price levels, we view ELD as attractively priced on more modest assumptions. We expect the company to pay a dividend yield of more than 5% from a modest payout ratio of 60%. While the company is cyclical, we are attracted to the underlying earnings growth from internal initiatives including network expansion, backward integration in chemicals, systems enhancement, and modernization as well as the new wool DC investment. As these projects come through, we expect both earnings and dividends to benefit.
Looking ahead, June 2023 will be a quiet month on the dividend front with two dividend receipts expected.
Performance Commentary - March 31, 2023 As at 31 March 2023, the Fund is invested in 28 companies which meet the criteria of a dividend yield above the cash rate, capital appreciation potential and sustainability of dividend. Given between 1% and 3% of Fund assets will be invested in each qualifying company at month end, listed shares accounted for 75.0% of assets and 25.0% of Fund assets were invested in cash deposits.
As at 31 March 2023, the Fund’s aggregate forward yield continued to look attractive at 5.0%, or 6.5% when “grossed -up” for franking credits and tax deferral benefits*. This can be compared to the RBA annual cash rate at month end of 3.60%. The two RBA measurements of term deposit rates in the Australian market, the “Average Rate (all terms)” and the “Special Rate (all terms)”, ended the month at 2.45% and 2.90%, respectively.
March 2022 saw eleven dividend payments and fifteen ex-dates.
Smartgroup (SIQ) outperformed the broader market over the quarter, its share price up ~26%. After a number of consecutively soft or disappointing updates, such as the loss of the DETVIC contract, SIQ reported a relatively uncontroversial CY22 result. Market expectations were low prior to the result, with SIQ trading on only 11x sustainable earnings. The concurrent announcement that CEO Tim Looi would be retiring is a signal that the Board is taking a proactive stance to improve the operational performance of the business. Whilst SIQ’s share price has re -rated, it still only trades on 13.5x sustainable earnings, an undemanding multiple for a highly cash-generative business with a strong balance sheet. Our thesis is centered on the normalization of vehicle supply driving a normalization in SIQ earnings. A positive long -term valuation driver that we have not yet factored in is Government legislation to encourage electric vehicle (EV) uptake via tax benefits through novated leases. The UK exhibited a strong increase in EV uptake when similar Government legislation were enacted, and this has benefited salary packaging and novated lease providers such as SIQ. We maintain the view that SIQ is an attractive investment proposition. The prospective dividend yield is 7.4%, fully franked, with typically a 100% payout of annual NPAT.
Looking ahead, April 2023 will be a busy month on the dividend front with nine dividend receipts expected.
Performance Commentary - February 28, 2023 As at 28 February 2023, the Fund is invested in 29 companies which meet the criteria of a dividend yield above the cash rate, capital appreciation potential and sustainability of dividend. Given between 1% and 3% of Fund assets will be invested in each qualifying company at month end, listed shares accounted for 70.0% of assets and 30.0% of Fund assets were invested in cash deposits.
As at 28 February 2023, the Fund’s aggregate forward yield continued to look attractive at 5.0%, or 6.5% when “grossed -up” for franking credits and tax deferral benefits*. This can be compared to the RBA annual cash rate at month end of 3.35%. The two RBA measurements of term deposit rates in the Australian market, the “Average Rate (all terms)” and the “Special Rate (all terms)”, ended the month at 2.25% and 2.80%, respectively.
February 2022 saw one dividend payment and six ex-dates.
Suncorp (SUN) went ex-div in February 2023. The stock performed well in late 2022 and has continued into 2023 on the back of a strong H1’23 result. We are attracted to Suncorp’s solid 6% dividend yield which is predominately funded from the stable general insurance business. We believe that this stability gives us the confidence that the high dividend yield ca n be maintained. In our view, strong premium growth of more than 10% as reported in the H1’23 result means investors can also expect modest growth in dividends.
Looking ahead, March 2023 will be a busy month on the dividend front with six dividend receipts expected.
Performance Commentary - January 31, 2023 As at 31 January 2023, the Fund is invested in 31 companies which meet the criteria of a dividend yield above the cash rate, capital appreciation potential and sustainability of dividend. Given between 1% and 3% of Fund assets will be invested in each qualifying company at month end, listed shares accounted for 75.9% of assets and 24.1% of Fund assets were invested in cash deposits.
As at 31 January 2023, the Fund’s aggregate forward yield continued to look attractive at 5.4%, or 6.7% when “grossed -up” for franking credits and tax deferral benefits*. This can be compared to the RBA annual cash rate at month end of 3.10%. The two RBA measurements of term deposit rates in the Australian market, the “Average Rate (all terms)” and the “Special Rate (all terms)”, ended the month at 2.10% and 2.70%, respectively.
January 2022 saw one dividend payment and no ex-dates.Atlas Arteria (ALX) was added back to the portfolio recently. We sold the previous ALX positions in June 2022 for around A$8.1 per share in a corporate action. Since then, the share price has fallen due to a large equity raising to fund the acquisition of The Chicago Skyway and as a result of the increase in global interest rates. We repurchased our holding in ALX at A$6.8 in Dec 2022. ALX has economic stakes in five toll roads with APRR in France and Skyway responsible for most of its valuation and cash flows. As an owner of mature toll roads ALX offers a reliable ~6% dividend yield with reliable modest growth. We believe this yield is attractive in the current environment.
Looking ahead, February 2023 will be a quiet month on the dividend front with one dividend receipt expected.
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